KARACHI, Pakistan (Reuters) – Airlift, Pakistan’s second largest startup, has shut down in the country, it said in a statement, blaming global recession and the downturn in capital markets.
The collapse made public on Tuesday, is the first announced closure of a prominent startup in recent years in Pakistan, where hundreds of companies have launched with the help of prominent venture capitalists.
“This has been an extremely taxing decision that impacts a large set of stakeholders and an emerging technology ecosystem,” the Airlift statement said.
Although Airlift was closing, the statement looked forward to further work in emerging markets.
“Due to factors beyond our control, the Airlift journey must come to an end,” it said. “However, our broader mission of creating positive change in the region will find a new life.”
The statement did not make clear whether Airlift would continue to operate beyond Pakistan and it could not immediately be contacted for further comment.
Airlift, which delivered groceries and goods, raised $85 million in the largest funding round to date by a local startup in 2021, but ran into trouble as a global market downturn made further fundraising difficult.
The only more sizeable startup in Pakistan is foodpanda, a food delivery service.
Fahad Rauf, head of research at Ismail Iqbal Securities, said the rising cost of financing as central banks raise rates to tackle soaring inflation has meant business models with high cash requirements are especially vulnerable.
“Airlift also faced such a scenario where its Series C1 funding round failed, resulting in the closure of operations. This is because the growth-based business model required continuous liquidity injections to sustain operations,” Rauf told Reuters.
(Reporting by Syed Raza Hassan; editing by Barbara Lewis)
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